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ISLAMABAD: The Federal Board of Revenue (FBR) Monday withdrew instructions issued by former FBR chairman Shabbar Zaidi to tax officials of seeking FBR chairman's approval and a 24-hour prior intimation to the CEO/principal officer/owner before attachment of a bank account.

In this regard, the FBR has issued instructions to all its field formations here on Monday regarding attachment of bank accounts under Section 140 of the Income Tax Ordinance, 2001 and Section 48 of the Sales Tax Act, 1990- Withdrawal of Directive.

In May, 2019, Zaidi had issued his first major directive to the field formations that there would be no bank account attachment unless taxpayer's chief executive officer/owner is informed at least 24 hours prior to attachment and the approval of the chairman FBR is obtained.

The said FBR's instructions were withdrawn through a new Board's directive to the field formations, on Monday.

Resultantly, now the tax officials are not legally bound to take prior approval of the FBR chairman and give 24-hour prior intimation to the CEO/principal officer/owner of companies before their bank accounts attachment.

Attachment of bank accounts of taxpayers: FTO for restricting powers of tax officials

The normal procedure of law would apply for attachment of bank accounts of the taxpayers.

Responding to the FBR's instructions, former FBR chairman Zaidi said in a tweet Monday, "I am personally sorry to hear the withdrawal of the first instruction issued when I joined as chairman FBR. No freezing of bank account without intimation and approval from chairman FBR. Due to this there was a major relief to taxpayers. I urge PM, FM and chairman FBR to reinstate."

According to the FBR's instructions issued on Monday, refer to Boards' earlier instructions issued vide letters dated May 5, 2019 and IR-Operations, 2019 respectively, whereby, following instructions were communicated: "No Bank accounts attachment unless the taxpayers' CEO/principal officer/owner is informed at least 24 hours prior to attachment and the Chairman FBR's approval is obtained".

In order to implement the law in its true spirit and to re-vest the power vested in the institution of the Commissioners viz-a-viz action under section 140 of the Income Tax Ordinance, 2001, the instructions referred supra are hereby withdrawn ab-initio, the FBR said.

The field formations may accordingly exercise the powers vested under SRO 274(I)/2020 dated April 2, 2020 and section 48 of the Sales Tax Act, 1990 for recovery of outstanding demands.

This is issued with the approval of the chairman FBR, the FBR added.

After assuming the charge of the post of the chairman FBR in 2019, Zaidi had issued first directive to the Chief Commissioners of Inland Revenue of Large Taxpayer Units (LTUs) and Corporate Regional Tax Office (RTO) and Regional Tax Offices.

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Tax experts said that the directive was issued to address the complaints of business community about the unnecessary attachments of the bank accounts for recovery of the disputed amounts from the bank accounts of the taxpayers without fulfillment of legal process.

In many cases, accounts have been attached without prior notice of the CEO/principal officer/owner of the business community.

Under Section 48 (recovery of arrears of tax) of the Sales Tax Act 1990, where any amount of tax is due from any person, the officer of Inland Revenue may attach and sell or sell without attachment any moveable or immovable property of the registered person from whom tax is due and recover such amount by attachment and sale of any moveable or immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company bank or financial institution fails to make payment under such guarantee, bond or instrument.

Inland Revenue officials are legally empowered to attach bank accounts or stop clearance of imported goods or manufactured goods under section 48 of the Sales Tax Act 1990.

Similarly, under Section 140 (recovery of tax from persons holding money on behalf of a taxpayer) of the Income Tax Ordinance 2001, for the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person owing or who may owe money to the taxpayer; or holding or who may hold money for, or on account of the taxpayer; holding or who may hold money on account of some other person for payment to the taxpayer; or having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice.

Copyright Business Recorder, 2021


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